Which of the following is not considered money in Canada today?
A) deposits at credit unions
B) bank of Canada notes
C) deposits at banks
D) coins
E) debit cards
What is a distinguishing characteristic of goods that are perfect complements?
A) straight-line indifference curves
B) upward-sloping demand curves
C) L-shaped indifference curves
D) upward-sloping indifference curves
E) curved indifference curves, bowed away from the origin
Using a credit card can best be likened to
A) taking out a loan.
B) a barter exchange.
C) using any other form of money, because you can immediately take the goods you
purchase home.
D) writing a cheque on your chequable deposit.
E) withdrawing money from a savings account.
Within a monopolistically competitive industry,
A) firms can freely enter and exit, and economic profit is zero in the long run.
B) firms can freely enter and exit, and economic profit is greater than zero in the long
run.
C) there are some barriers to entry and exit, and economic profit is zero in the long run.
D) there are some barriers to entry and exit, and economic profit is greater than zero in
the long run.
E) firms can freely enter and exit, and economic profit is zero in the short run.
If a strike or lockout occurs in a bilateral monopoly situation, it is usually because
A) the demand for labour is relatively inelastic.
B) the demand for labour is relatively elastic.
C) the supply of labour is relatively inelastic.
D) the supply of labour is relatively elastic.
E) one party has misjudged the costs each party can inflict on the other.
Refer to Figure 29.3.1, which shows the outlays and revenues for the government of
Pianoland. Automatic fiscal policy would be shown as a movement
A) from right to left along the revenues curve.
B) from left to right along the revenues curve.
C) from right to left along the outlays curve.
D) from left to right along the outlays curve.
E) all of the above
Which one of the following is an expenditure flow from households to firms?
A) goods and services
B) factor services
C) payments for goods and services
D) payments for factor services
E) loans
The Rule of 70 is used to
A) estimate how much of an economy’s growth rate is attributable to increases in capital
per hour of labour.
B) calculate the standard of living.
C) calculate the economy’s growth rate.
D) estimate how long it will take the level of any variable to double.
E) estimate how much of an economy’s growth rate is attributable to technological
advance.
Which of the following statements regarding human capital is INCORRECT?
A) Human capital is the accumulated skill and knowledge of human beings.
B) Education is the only vehicle for the creation of human capital because training
simply reinforces what has already been learned.
C) The accumulation of human capital is the source of both increased labour
productivity and technological advance.
D) Writing and mathematics, the most basic of human skills, are crucial elements in
economic progress.
E) Human capital is the fundamental source of labour productivity growth.
Which one of the following newspaper quotations describes a movement along an SAS
curve?
A) “The decrease in consumer spending may lead to a recession.”
B) “The increase in consumer spending is expected to lead to inflation, without any
increase in real GDP.”
C) “Recent higher wage settlements are expected to cause higher inflation this year.”
D) “Growth has been unusually high the last few years due to more women entering the
labour force.”
E) “The recent tornadoes destroyed many factories in Calgary and Edmonton.”
Which one of the following is not an assumption of marginal utility theory?
A) People derive utility from their consumption.
B) More consumption yields more total utility.
C) Utility can be measured.
D) Marginal utility diminishes with more consumption.
E) Consumers maximize total utility.
Refer to the table below to answer the following questions.
Table 31.1.2
Refer to Table 31.1.2. The table shows a country’s demand and supply schedules. At
what world price would the country import?
A) at exactly $8 a unit
B) any price above $8 a unit
C) a price of $10 a unit
D) a price of $20 a unit
E) a price below $8 a unit
Consider a cartel consisting of several firms that is maximizing economic profit. If one
firm cheats on the cartel agreement by cutting its price and increasing its output, the
best response of the other firms is to
A) cancel the cheating firm’s membership in the cartel.
B) continue to sell at the agreed-upon price.
C) raise their price to recapture lost profit.
D) cut their prices also.
E) cut output to keep total cartel output at its original level.
Use the figure below to answer the following question.
Figure 27.3.2
In Figure 27.3.2, the multiplier is
A) 0.25.
B) 1.00.
C) 1.60.
D) 2.50.
E) 10.
Use the figure below to answer the following questions.
Figure 19.1.3
In Figure 19.1.3, the richest 20 percent of all families receive what share of all income?
A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent
E) 80 percent
An increase in the price level
A) shifts the AE curve upward and increases equilibrium expenditure.
B) shifts the AE curve upward and decreases equilibrium expenditure.
C) shifts the AE curve downward and increases equilibrium expenditure.
D) shifts the AE curve downward and decreases equilibrium expenditure.
E) has no impact on the AE curve.
Expansionary fiscal policy
A) increases aggregate demand.
B) decreases aggregate demand.
C) increases short-run aggregate supply.
D) increases long-run aggregate supply.
E) A, C, and D are correct.
Selling costs
A) are variable costs that increase total cost.
B) always increase demand for a firm’s product.
C) always decrease demand by increasing competition.
D) always provide consumers with valuable services.
E) include marketing expenditures on advertising and packaging.
An economic model is
A) tested by examining the realism of its assumptions.
B) useful if it predicts well, even if its assumptions are not realistic.
C) tested by the Testing Committee of the Canadian Economic Association.
D) not useful unless it predicts with 100 percent accuracy.
E) not useful because it simplifies real problems.
Canada’s producer surplus ________ when Canada imports a good, and Canada’s
producer surplus ________ when Canada exports a good.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
The production possibilities frontier
A) is the boundary between attainable and unattainable levels of production.
B) is the boundary between what we want to consume and what we want to produce.
C) shows how production increases as prices rise.
D) shows prices at which production is possible and impossible.
E) illustrates why there need not be any scarcity in the world.
The fixed basket of Econoland consists of 10 units of A, 20 units of B, and 30 units of
C. Current prices are $1 per unit of A, $2 per unit of B, and $3 per unit of C. Base year
prices are $1 for each unit of A, B, and C. What is the CPI in the current year?
A) 43
B) 100
C) 233
D) 430
E) 140
The slope of the aggregate planned expenditure curve is equal to
A) [b(1 – t) – m].
B) the marginal propensity to consume.
C) the marginal propensity to import.
D) 1 minus the marginal propensity to import.
E) the autonomous expenditure multiplier.
The equation of exchange in terms of growth rate is
A) Money growth rate + Rate of velocity change = Inflation rate + Real GDP growth
rate.
B) Money growth rate – Rate of velocity change = Inflation rate + Real GDP growth
rate.
C) Money growth rate = Inflation rate – Real GDP growth rate.
D) Inflation rate = Money growth rate + Rate of velocity change + Real GDP growth
rate.
E) Inflation rate = Real GDP growth rate.
The act of parliament that provides our anti-combine law is
A) the Anti-Combine Act of 1986.
B) the Anti-Combine Act of 1889.
C) the Competition Act of 1986.
D) the Competition Act of 1889.
E) the Competition Act of 1967.
A firm experiences ________ when its ________ as output increases.
A) economies of scale; long-run average cost curve slopes downward
B) diseconomies of scale; average total cost curve slopes downward
C) economies of scale; long-run average cost curve shifts upward
D) diminishing marginal returns; average total cost curve shifts upward
E) constant returns to scale; long-run average cost curve shifts upward
Refer to Fact 18.3.1. The winners from this contract are ________. The losers from this
contract are ________.
A) workers who keep their jobs; owners of the firms, consumers, and workers who are
fired
B) workers who keep their jobs and consumers; owners of the firms and workers who
are fired
C) the government; owners of the firms, consumers, and workers who are fired
D) workers who keep their jobs and owners of the firms; workers who are fired
E) workers who keep their jobs and owners of the firms; the government
In the Canadian economy, market prices and factor costs would be the same except for
A) depreciation.
B) exports.
C) personal taxes.
D) indirect taxes and subsidies.
E) capital consumption.
The market fundamentals that determine the exchange rate in the long run are
A) the real exchange rate and the quantities of money in each economy.
B) the interest rate differential and the world demand for exports.
C) expectations.
D) purchase power parity and interest rate parity.
E) the world demand for exports and the world demand for imports.
Suppose a 1-unit increase in labour, from 2 to 3 workers, increases output from 10 to 15
tea cups. The marginal product from the increase in the quantity of labour is
A) 1 tea cup.
B) 3 tea cups.
C) 10 tea cups.
D) 5 tea cups.
E) 15 tea cups.
Limit pricing is the practice of
A) limiting the amount that can be purchased to drive up prices.
B) threatening to go to the limit in a price war if someone enters your market.
C) charging a monopoly price, but producing a quantity greater than the quantity at
which MC = MR.
D) setting the price at the highest level that inflicts a loss on the entrant.
E) charging a price higher than the monopoly price, but producing a quantity greater
than the quantity at which MC = MR.
It is difficult to maintain a cartel for a long period of time. Which one of the following
is the most important reason?
A) Each firm has an incentive to collude.
B) Other firms will enter the industry.
C) Firms in the cartel will want to raise the price.
D) Consumers will eventually decide not to buy the cartel’s output.
E) Each firm has an incentive to cheat.
The opportunity cost of good A in terms of good B is equal to the
A) money price of good A minus the money price of good B.
B) money price of good B minus the money price of good A.
C) ratio of the money price of good A to the money price of good B.
D) ratio of the money price of good B to the money price of good A.
E) money price of good A plus the money price of good B.
The branch of economics that studies the choices of individuals and businesses is
A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.
E) social economics.